AUD strength to be tested this week

It has been a quiet start to the week in the FX space with most risk currencies remaining choppy. 

AUD/USD is sidelined and still holding its ground above 0.93.Given the fact the AUD has outperformed its risk peers since the budget announcement last week, naturally there is more room for the AUD to be sold off. Pressure is likely to mount particularly as China continues to show signs of strain. AUD/USD has held the range or 0.933 to 0.94 and traders will be eyeing the top and bottom end very closely with some interesting releases on the way this week. 

On the calendar we have tomorrow’s RBA monetary policy meeting minutes being the first major local release for the week. This will then be followed by RBA assistant Gov Debelle’s speech. The RBA is expected to reinforce its neutral stance and perhaps next month’s meeting will be more interesting as we might hear some commentary on recent developments on the fiscal front. Later in the week we get consumer and inflation data which I doubt will have too much of an impact on the AUD. What will probably carry more weight are the releases out of China where we have the HSBC manufacturing PMI on Thursday. I’ll be happy to play the ranges this week with potential for shorts in the 0.94 region.

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